This year is called the “first year” of NFT. Artists, celebrities, and giant companies have entered the NFT. The ever-high NFT prices have made it the focus of public attention. 01 Blockchain launches a series of special studies on NFT, inventory and summary of NFT issuance market, investment and financing status, hot products, policies and other related content, to help readers have a more comprehensive understanding of the NFT market.
This article mainly discusses NFT from a policy perspective. At present, my country has not defined and supervised NFT legally. In view of the various forms of NFT, such as digital painting, music, video, text, game props, etc. This article will start from the existence of NFT, discuss the legal policies of various similar products, and make reference for the possible development of NFT in law.
Blockchain is the underlying technology of NFT, and NFT is a typical application of blockchain. It should be noted that blockchain has become one of the most important basic technologies in the era of digital economy by virtue of its characteristics of transparency, openness, traceability, and non-tamperability, and it has risen to the national level. Although the NFT uses the underlying technology of the blockchain, the legal policy does not explain the NFT itself.
As early as 2019, the development of blockchain technology has become a national-level strategy. During the 18th collective study session of the Political Bureau of the Central Committee, General Secretary Xi Jinping emphasized that “blockchain should be used as an important breakthrough for independent innovation of core technologies. Blockchain technology and industrial innovation and development”.
In addition, local governments are constantly proposing various supporting and regulatory policies to help the development of blockchain technology. Since the beginning of this year, blockchain-related policies have continued to be introduced. In March, the blockchain was written into the “Fourteenth Five-Year Plan for National Economic and Social Development of the People’s Republic of China and the Outline of Long-Term Goals for 2035”. The plan proposes to create new advantages in the digital economy and accelerate the promotion of digital industrialization. Promote the innovation of blockchain technology, develop blockchain service platforms and applications in the fields of financial technology, supply chain management, and government services with the focus on the alliance chain, and improve the regulatory mechanism.
In June, the Ministry of Industry and Information Technology and the Office of the Cyberspace Administration of China jointly issued the “Guiding Opinions on Accelerating the Application of Blockchain Technology and Industrial Development”, pointing out that it will focus on supply chain management, product traceability, data sharing and other real economy areas to promote the integrated application of blockchain. Support the digital transformation of the industry and the high-quality development of the industry. Promote the application of blockchain technology in government services, evidence collection, smart cities and other public service fields, and support the transparency, equality, and precision of public services.
From the perspective of the provision, use, and management of blockchain information services, the “Regulations on the Management of Blockchain Information Services” issued by the National Internet Information Office on January 10, 2019 require that blockchain information service providers need to perform For filing, changing or terminating services, the formalities for change or cancellation shall be handled. Service providers who develop and launch new products, new applications, and new functions shall conduct safety assessments in accordance with relevant regulations. Those who violate the “Regulations” will be punished in accordance with these regulations and relevant laws and administrative regulations; if a crime is constituted, criminal responsibility will be investigated in accordance with the law.
Related policy documents
“Guiding Opinions on Accelerating the Application of Blockchain Technology and Industrial Development”
“Regulations on the Management of Blockchain Information Services”
“Liaoning Province Intellectual Property Protection Regulations”
“The Fourteenth Five-Year Plan for National Economic and Social Development of the People’s Republic of China and the Outline of Long-term Goals for 2035”
“Cyber Security Law”
“Provisions on Several Issues Concerning the Trial of Cases by Internet Courts”
Tokens can be divided into two types: homogenization and non-homogeneity, but there are essential differences between the two. Homogenization means that tokens can be exchanged indiscriminately. Bitcoin and Ethereum are all homogenized tokens. The non-homogeneous nature of NFT distinguishes it from virtual tokens. NFT carries the value of physical or digital assets attached to it. Under my country’s high-pressure policy on virtual currencies, it is very important to clarify the difference between the two.
Since virtual currency is easily used for money laundering and other illegal activities, and lack of exchange mechanism, it is easy to cause inflation and market chaos. my country has always adopted a policy of suppressing virtual currencies. As early as 2013, five ministries and commissions including the People’s Bank of China issued the “Notice on Preventing Bitcoin Risks”, which clarified that Bitcoin is a specific virtual commodity, which is not issued by the monetary authority, is not legally compensatory and compulsory, and is not compatible with The equivalent legal status of currency cannot and should not be used as currency in the market.
In 2017, the financing activities of issuing virtual tokens disrupted the market order. Seven ministries including the People’s Bank of China jointly issued the “Announcement on Preventing Token Issuance Financing Risks”, immediately halting various token financing activities, requiring any organization or individual It is not allowed to illegally engage in token issuance financing activities; strengthen the management of token financing trading platforms, prohibit the exchange business between legal currency and tokens, and “virtual currencies”; require all financial institutions and non-bank payment institutions not to conduct transactions with tokens Business related to issuance financing transactions.
In September of this year, the People’s Bank of China issued the “Notice on Further Preventing and Disposing of the Risks of Virtual Currency Trading Hype”, further clearly pointing out the attributes of virtual currencies and virtual currency-related activities, clearly proposing the working mechanism to deal with the risks of virtual currency trading hype, and strengthening trading hype Risk supervision. This policy has given the NFT a warning that if it relies on the development of a model of currency issuance financing and speculation arbitrage, NFT will follow in the footsteps of virtual currencies. Therefore, it is very important to distinguish the difference between virtual currency and NFT. It is wrong to develop NFT with the idea of virtual currency.
Related policy documents
“Announcement on Preventing the Risk of Token Issuance Financing”
“Notice on Preventing Bitcoin Risks”
“Notice on Further Preventing and Disposing of the Risk of Hype in Virtual Currency Trading”
“Risk reminder on preventing illegal fund-raising in the name of “virtual currency” and “blockchain””
“Opinions on Providing Judicial Services and Guarantees for Accelerating the Improvement of the Socialist Market Economic System in the New Era”
Virtual assets/digital collections
NFT is produced through human labor and condenses human abstract labor. Similar to virtual assets, NFT supports the transfer, transaction, and income generation of consideration and is valuable. NFT holders can possess, use, dispose of, and profit, and they are disposable. In October of this year, in the internal pages of Tencent Magic Core APP and Alipay Mini Program “AntChain Fan Tablet”, the words “NFT” disappeared and changed to “Digital Collection”. From this point of view, moving closer to virtual assets or digital collections may be the possible landing form of NFT under my country’s compliance framework.
Virtual assets are protected by law. According to the provisions of Article 127 of the Civil Code, where the law has provisions on the protection of data and network virtual properties, follow those provisions. Accordingly, the “Civil Code” clarifies that data and network virtual property are included in the scope of protection of civil property rights.
Today, when the scale of the digital economy is becoming more and more dominant, digital assets have become an important part of economic activities. NFT’s development in the direction of digital collections or virtual assets may be the safest way at present. At present, many provinces and cities have introduced policies related to “digital asset trading”. “Ningbo City’s Three-Year Action Plan for Accelerating the Cultivation and Innovative Application of Blockchain Industry (2020-2022)” proposes to explore the establishment of a block chain supervision mechanism, focusing on strengthening the block chain in finance, digital asset transactions, e-government, and personal data protection Industry regulatory governance mechanisms in other fields;
The “Several Policies and Measures for Accelerating the Development of the Blockchain Industry in Hainan Province” released in May 2020 pointed out that leading companies are supported to explore the construction of digital asset trading platforms, explore the digitization of assets, the protection of digital assets, the global flow of digital assets, The standards and technical models of digital asset transactions have promoted the pilot of digital asset-related formats in Hainan.
The “Chengdu Government Work Report 2020” stated that it will accelerate the construction of a blockchain intellectual property pledge financing service platform, promote the establishment of a digital asset trading center, and steadily promote the legal digital currency pilot.
Related policy documents
“Ningbo City’s Three-Year Action Plan for Accelerating the Cultivation and Innovative Application of Blockchain Industry (2020-2022)”
“Several Policies and Measures on Accelerating the Development of the Blockchain Industry in Hainan Province”
Digital artwork is the most important form of NFT. Currently, there are generally two ways to create artwork NFT, one is to directly create and form NFT artwork online, and the other is to cast offline physical artwork into NFT artwork. From the perspective of the legal nature of NFT artworks, NFT artworks are essentially works presented in digital form. From the perspective of the legal effect of the NFT artwork blockchain deposit certificate, its essence is also a kind of electronic data stored in the blockchain network. From the perspective of NFT physical artwork casting rights and interests, NFT artwork is related to the rights and interests of artwork authors, collectors, and users.
From the perspective of the definition of artworks, the first paragraph of Article 2 of the “Article Management Measures” stipulates: “The artworks mentioned in these Measures refer to paintings, calligraphy and seal carving works, sculptures and sculpture works, artistic photography works, and installation works of art. , Arts and crafts works, etc. and limited copies of the above-mentioned works. The artworks mentioned in these Measures do not include cultural relics.” According to this, the current NFT does not belong to the category of works of art.
What is interesting is that before the large-scale rise of NFT, a group of pioneer artists used it to explore the possibility of developing digital art. For some artwork NFTs, regulations on artwork have positive and profound significance for artistic creation in the digital economy era.
Related policy documents
“Article Operation and Management Measures”
“The Copyright Law of the People’s Republic of China”
“Data Security Law”
The rich diversity of online publications is similar to that of NFT, and their manifestations are all digital works, but they are not the same. It should be noted that at present, NFT is not equal to digital works, or even the deposit of digital works, it is only a cryptographic expression of digital copies on the chain.
In terms of form, the current NFT is the closest to an online publication. According to the “Regulations on the Administration of Online Publishing Services”, online publications refer to digital works that are provided to the public through information networks and have publishing features such as editing, production, and processing. The scope mainly includes:
(1) Knowledgeable and ideological texts, pictures, maps, games, animations, audio and video readings and other original digital works in the fields of literature, art, science, etc.;
(2) Digital works consistent with published books, newspapers, periodicals, audio-visual products, electronic publications, etc.;
(3) Digital works such as a network document database formed by selecting, arranging, and collecting the above-mentioned works;
(4) Other types of digital works recognized by the State Administration of Press, Publication, Radio, Film and Television.
From an operational level, the law has made policy regulations on the generation and circulation of online publications. According to Article 7 of the Regulations on the Administration of Online Publishing Services, to engage in online publishing services must be approved by the publication administrative department in accordance with the law and obtain the Online Publishing Service Permit. “According to Article 22 of the “Network Security Law of the People’s Republic of China”, if network products and services have the function of collecting user information, their providers shall expressly indicate to users and obtain consent.
Related policy documents
“Regulations on the Administration of the Publication Market”
“Regulations on the Administration of Online Publishing Services”
“Administrative Measures for Internet Information Services”
“The Copyright Law of the People’s Republic of China”
“Regulations for the Implementation of the Copyright Law of the People’s Republic of China”
“Computer Software Protection Regulations”
“Copyright Collective Management Regulations”
“Regulations on the Protection of the Right of Information Network Communication”
“Administrative Measures on the Payment of Remuneration for Broadcasting Sound Recordings by Radio and TV Stations”
The game field is also the most typical application of NFT, including the earliest collection games such as Cryptokitties. But at present, richer gameplay has appeared in many games, such as the simulation business game The Sandbox, the racing competition game Battle Racers, and even the NFT version of liquid mining, such as Axie Infinity . NFT-based game equipment makes these games more “realistic”, and even the phenomenon of relying on playing games to support their families.
At present, regulations related to online game virtual currency transactions are mainly concentrated in the abolished documents formulated by the Ministry of Culture. For example, the abolished “Interim Measures for the Administration of Online Games” stipulates that online game virtual currency transaction services should be obtained from the “Internet Culture Operation” The License and the Notice of the Ministry of Culture on Strengthening the Supervision of Online Game Promotion and Promotion Activities stipulate that online game operating companies shall not provide users with services for the exchange of online game virtual currency or virtual items for legal currency or physical objects.
At present, the currently effective laws and regulations do not directly target online game-related assets and virtual currencies. In judicial practice, in the case of theft of some online accounts and equipment, the court held that the theft of virtual currency in online games was convicted and sentenced for the crime of illegally obtaining computer information system data. Some courts held that the valuable objects (including intangible objects) that can be managed exclusively by citizens, can be transferred and disposed of, can be regarded as private property owned by citizens, and online game equipment and virtual currency are considered virtual property. From this point of view, it is a trend that valuable content such as virtual currency and equipment in online games becomes virtual property.
Related policy documents
“Interim Measures for the Administration of Online Games” (abolished)
“Network Culture Business License”
“Notice of the Ministry of Culture on Strengthening the Supervision of Online Game Promotion Activities”
NFT industry standard
At present, although my country does not provide specific definitions and regulations for NFT in policy, the rapid outbreak and frantic growth of NFT this year have made NFT compliance inevitable. Currently, various institutions and enterprises are actively establishing relevant standards for NFT.
In September, the Standardization Work Committee of the China Technology Market Association under the Ministry of Science and Technology established a working group with a number of industry-university-research institutions to jointly develop and draft the “NFT Platform and Product Evaluation” group standard. It aims to further explore the digital transformation and application of digital technology in the field of intellectual property, and establish a set of relevant group standards suitable for China’s national conditions and meet the long-term and healthy development of the domestic NFT industry as soon as possible.
“Accelerating the development of NFT-related standards has become an industry consensus.”
——Wang Bing, Deputy Secretary-General of China Technology Market Association
In October, the first self-discipline convention in the NFT industry was released. Led by the National Copyright Transaction Center Alliance, China Academy of Art, Hangzhou Internet Notary Office of Zhejiang Province, Ant Group, JD Technology, Tencent Cloud, etc. jointly issued the “Digital Cultural and Creative Industry Self-Regulation Convention”, which aims to strengthen industry self-discipline and establish a benign digital cultural and creative industry Industry development ecology helps the development of China’s cultural and creative industry.
The “Convention” points out that it is necessary to adhere to the original intention of blockchain technology to serve the development of the digital cultural and creative industry, and provide innovative solutions for the confirmation and circulation of digital cultural and creative works, so that creators’ works can better reach the market and promote the prosperity of the original cultural industry. develop. Fully use blockchain technology to protect the copyright of digital cultural and creative works on the chain and protect the reasonable rights and interests of creators. Among them, resisting hype is an important consensus of the Convention.
“Through the issuance and implementation of the Convention, it is hoped that more institutions and social forces will participate in the standardized development of the digital cultural and creative industry, and jointly create a clean, fair and healthy development environment for the development of the cultural industry.”
——Li Heng, Chairman of the National Copyright Exchange Center Alliance
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